Rate Watch - After the Debt Deal

As we discussed last week, buyers re-entered the treasuries market and brought rates down. As predicted, the debt ceiling negotiations passed through the House and the Senate, avoiding a US debt default. Tuesday, Wednesday, and Thursday all saw lower rates. On Friday, however, we received the jobs report and it contained mixed data. On the one hand, there were much more jobs added than expected, providing proof of a strong economy and labor market. On the other hand, hourly wages came in lower than expected and inflation ticked up to 3.7% from 3.4% - these are the things the Fed wants to see. The market is hoping that the increase in the unemployment rate will satisfy the Fed enough to go through with the “pause” for June. Here is how markets are placing their bets on the upcoming Fed decision.

The Fed meets June 13-14 at which point they will announce their monetary policy. After which, Chairman Powell will speak and answer questions. Here is what is in store for this week – there isn’t much action planned. Monday S&P US Services PMI Factory Orders ISM Services Tuesday None Scheduled Wednesday US Trade Deficit Consumer Credit Thursday Initial Jobless Claims Wholesale Inventories Friday Nothing Scheduled Chart Check The recent highs of last week did not quite reach our highs of the beginning of the year and it looks like things are moving lower. I would love to retest the 6 month support line (drawn in black) with enough strength to trend below it. I know we will eventually get there, just a matter of when.

That's it for this shorter week. As always, please reach out anytime should you, or someone you know, have any questions and/or comments. I'm always here to help!

Matt Brady

Branch Manager, NMLS ID#311662

(858)342-8659 cell |

matt.brady@watermarkhomeloans.com  
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